Australia Can Use All Its Resources to Produce 250 DVDs

question 173

Multiple Choice

Australia can use all its resources to produce 250 DVDs or 500 shoes.China can use all of its resources to produce 30 DVDs or 300 shoes.The opportunity cost of producing a DVD in Australia is

• A)20 shoes.
• B)1 DVD.
• C)2 shoes.
• D)500 shoes.
• E)1/2 of a shoe.

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Definitions:

Allocated General Overhead

The portion of indirect costs assigned to a particular production process, product, or department.

Variable Costs

Expenditures that directly correspond with production levels or the amount of sales.

Fixed Costs

Expenses that remain constant regardless of the level of production or business activity.

Suspension of Operations

The temporary halt of business activities or operations, which can be due to a variety of reasons, including economic downturns or emergencies.